Etsy sellers confront unknowns after Supreme Court ruling

The 5-4 court opinion finally recognizes the impact of the internet and acknowledges commerce has changed since the court ruled in the 1960s and early 1990s that businesses had to have a physical presence in the state before the state could require them to collect state and local sales taxes.

The Supreme Court's ruling in favour of South Dakota and against Wayfair Inc (W.N) and two other online retailers was a victory for state governments, and a boost for brick-and-mortar stores. Even before the Supreme Court's ruling, however, Amazon had said it was moving to collect state sales taxes on its inventory sold in all 45 states with statewide taxes. Customers were generally supposed to pay the tax to the state themselves if they don't get charged it, but the vast majority didn't. The Court noted that the law had three features created to prevent discrimination against or undue burdens upon interstate commerce: it had a safe harbor for those transacting limited business in the State; it was not retroactive; and the State was a member of the Streamlined Sales and Use Tax Agreement, which has been adopted by more than 20 States to standardize taxes to reduce administrative and compliance costs. Then he heard that it could mean collecting sales tax revenue from other states as well.

Rep. Tom Reed, R-N.Y., said he supported the ruling's creation of a level playing field between online sellers and physical retailers. "We do have a mechanism in place in Tennessee that we can begin collecting sales tax", Hawk said.

Even before that change, Pennsylvania got $202 million of online sales tax revenue in 2017 - 2-1/2 times as much as it did in 2014, when it received just $81.2 million, according to information the Pennsylvania Treasury provided to Reuters.

Lawmakers have tried unsuccessfully to pass online sales tax legislation for years, with the most recent attempt failing after several conservatives called the provision a tax increase on online shoppers.

But taxpayers could raise challenges, including the argument that collecting sales tax for previous sales could subject the seller to double taxation if the customer had already paid sales tax.

"The South Dakota model is a safe bet for states, so it's reasonable for them to start there" said Max Behlke, who directs budget and tax issues at the National Conference of State Legislatures.

At a local retailer, a consumer is going to pay a six percent tax rate.

"It was an issue of fairness since brick-and-mortar businesses must pay property and sales taxes while online retailers were exempt", said England, who serves as chairman of the House's appropriations committee. Amazon has been charging sales tax in the state for more than three years, since it opened large warehouses in Lakeland and elsewhere in Florida.

But using the compliance services won't be without complications, says Jamie Yesnowitz, an accountant specializing in state and local taxes with the firm Grant Thornton.

"They've been getting an unfair advantage for 20 years. We want to make sure when we do levy taxes that they're levied in a fair and equitable manner", Blair said.

While almost impossible to determine how much revenue Johnson City or Washington County loses to online sales, state officials estimate Tennessee loses between $200 million and $450 million annually.

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